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Does being a good agent require believing in your market?

One of the comments on my last blog post was

"If you don't have confidence in the market how can you sell you buyer clients homes. It sounds like you need to make a decision on a career."

I'm not an agent or anybody that directly makes my living from selling homes, but I thought this was something I wanted to post about and get a good discussion going.

Is believing in your market going up, a prerequisite to being a good agent?

I tend to look at one of the main jobs of real estate agents to advise there buyer/seller to the best of their knowledge, not to be a cheerleader for their personal housing market. This is one of the things that ultimately is working to give the real estate industry a bad name among many consumers. Kinda like the NAR campaign "It's a great time to buy or sell a house" ugg...

Most people are going to buy homes regardless of where the market is going, yes some may change their timing or how much their willing to spend because of housing outlooks, but they'll still buy. If I were an agent, I'd have no problem selling home to buyers in a market I thought was trending down, as long as I was giving them the best representation I could which includes the best available market information, up or down.

I fact thinking about it many of the most successful agents here on ActiveRain the ones that have been through housing market downturns before, and the ones that are likely to make it through this one are the ones that openly talk about both the good and bad in their markets.

What say you?

Posted by Matt Heaton on 02/25/2008 01:40 AM

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70 Comments on Does being a good agent require believing in your market?

FEB

2008

As another interesting thought. As many that read my blog here know, I'm a major housing bear. I was talking about the impending housing downturn several years ago when few were. Yet at the same time I helped to found a company in the real estate industry. Even though we cater to real estate professionals, I've never felt the need to be in the ra, ra housing camp. I feel like it's best to present your professional opinion regardless of if it's what your customers want to hear. Sometimes it may cost you a "sale", but I think in the long run their is a net benefit from it.

You need to be in tune with the market and in a position to advise buyers and sellers as to the current condition of the market to assist them in making appropriate decisions.

What a great post. Every day I see agents including themselves in the negativity around the real estate market. I work hard to add postiive influence when working with my clients. This can be done in a truthful way. The media is doing a tremendous job without our help in being negative. Thanks for bringing this to light.

Matt, I think the agent is only as good as the services they provide. Being "up" on their personal market of course makes it a easier sale. But in a great market and not having to "sell" doesn't really determine the great sales person when the buyers are standing in line. When the market is tough, the tough get going. That's when the true sales persons stand out.

Hi Matt-I say its not whether you believe its a good market or not...or being optimistic...its about being honest..and presenting the facts..its about doing what we are hired to do and that is help buyers and sellers. Tell the truth...be honest...and let people make their own evaluation. To me its always better than paying rent,,...if you can afford the monthly payment....and you don't have a house to sell...its always a great time to buy.

Matt...excellent post. I believe you have to know your market inside and out BUT you need to be realistic. It's okay to optimistic but not okay to mislead the reality of the market. I've been through this before and you can make a very good living in a buyers market...you just need to work much harder.

Matt, this is a very gentle rant. I don't know the context of where the quote came from, however.....it is our business to provide as much knowledge to the consumer as is possible about buying and selling in any trending market. I don't make my client's decisions, but I do have responsibility to help the client understand if their goals are reasonable in this or any market. Clients that have a current need to buy or sell can identify reasonable incentives to do so. As long as I do not see any unforeseen element that they have not considered, I get on board with helping and delivering their goals. It is all based on the consumer's specific goals and how they look from this market perspective. A first time home buyer can reasonably consider for the first time prices that may allow them to purchase. That is an incentive in any market as long as they are able to obtain a good loan, manage the payments and foresee a reasonable horizon. Investors in my opinion still need to look at the numbers and their investment horizon, before purchase. It still seems for investors in my area, risky to consider flipping any property. This past 2.5 years has made me more knowledgeable (thanks to ActiveRain) and much more proactive in helping my clients make their decisions. I am not afraid to say.....wait, based on their specifics or....that seems reasonable and given these conditions....we can work together on your goals. Thanks for bringing the best questions forward for us to ponder!

I think you are in it for the long haul. When you signed on a real estate broker, you knew there would be ups and downs. But isn't that L I F E ... joy, set backs, patience, gains and struggles and break even situations? In addition to market acceptance and the challenge to make it work no matter what the climate is, you have to have confidence in your AREA too. Are you excited and passionate about your area AND your market? Good post Matt man!

Matt.... I am not a realtor, as you know, but I don't think I have truly seen this written or spoken about. What I have read is that we need to stay positive and project to the consumer that it's a great time to buy, because home values are low and because rates are low.

But, as you mentioned, people will always buy and/or sell. I think the statement that you use from someone else is double talk. Meaning, it's more of a pep talk to themselves, because things are really bad for that particular person.

I think what it comes down to as you mentioned and a few others is the ability to be a professional in any market, good or bad. Being knowledgeable, good or better than good at what you do, ethical, and honest. That's my opinion on how we should treat any market....always thinking outside the box. And just giving good advice and information to the consumer.

Hi, Matt. We advise clients realistically for the current conditions, whether they're buyers or sellers. That being said, we're likely to pick up a listing on a gorgeous home because the seller came to one of my open houses and was impressed that I talked up the home and the area.

I just pointed out benefits of living there. I don't think you have to lie.

Matt...

If we don't have faith in our market...

And...In our abilities as salespeople we might as well throw the licenses in the lake :)

People have to live somewhere...Hopefully they prefer not to camp on the side of the road...

Not that's there's anything wrong with that :)

TLW...ROAR!

Matt,
The market is the Market. We are the "professionals". I provide mortgages for my clients but it is the same thing as selling houses.. it is sales. You have to provide integrity, professionalism, knowledge to your client. You must be there advocate. It they are trying to do something that you know will not work for them (buy a 2nd home or a mortgage that they cannot afford), it, in my opinion, should be our responsibility to do everything we can to persuade the client not to. I for one like to sleep soundly at night. AJ

Matt,

To answer your question, believing that the market is going up when it is, in fact, going down is a little silly, in my opinion.

I recently was interviewed for a RI magazine about our market. I prefaced my statement with, "a lot of Realtors will not agree with me"! I keep reading about this being the time to buy, blah blah. Well, in my market, it's not a bad time to buy. The rates are low and the prices have dropped. Will they drop even more? Probably. But will the rates stay the same? Who knows? Right now it's a balancing act and I feel my buyers have the right to any knowledge I have about the industry. They pay me for it.

When I work with buyers, they want the truth! That is what they hire me for, not to paint a rosy picture and put them in a bind that will change their lives. If this makes me a "bad" agent, then so be it.

I seriously think that a lot of Realtors' will sugarcoat their areas market for their own reasons, and not necessarily for the consumer.

Karen, I like your professionalism... AJ

Matt, You don't like the NAR campaign? Join the club!!! I tell it like it is. If someone ask me how my market is I tell them, "It sucks!!! But if you are looking to buy we can probably find you a pretty good deal. If you are looking to sell.... you are screwed!! but I will do everythng I can to make it happen"

Folks appreciate the facts and deserve no less.

"If you don't have confidence in the market how can you sell you buyer clients homes..."

My take on this is a little different - it does not say you have to believe your market is going UP.

Our market is relatively stable if taken against most other areas in the country. Land is still a solid investment - we've all heard the saying, They aren't making any more of it.

I also have confidence is the life style that I sell. Not everyone is looking to make a quick buck in real estate. There are other reasons to move.

I have confidence in my ability to match a buyer with a property to fit their wants and needs.

We must believe. If not, we should be out looking for another profession.

Matt, I refuse to bad mouth the market with other Realtors in my office or around town. It is what it is and we must work in it, regardless of bull or bear. Since you like those terms.

With my sellers I am honest about the market "conditions" and show them all the data necessary for correctly pricing their property. It is a heart to heart discussion.

Reality. We need to own reality... One cannot accuse the NAR of being the National Association of Realists. Telling it like it is and giving our clients realistic advice are the only proper ways to handle ourselves. If the market isn't friendly to one, then it may (or may not) be friendly to another.

FEB

2008

Being an agent requires believing in yourself.

Believing in yourself requires being honest about market conditions. If you believe you are representing the best interest of your client...and not yourself.

Is believing in your market going up, a prerequisite to being a good agent?

No... you can still be a good representative desptie your personal opinion on the market. In order to be successful I'm of the opinion it's more important to believe in the product you're selling and the value of that product.

Believing in yourself requires inner strength and confidence; being a good agent requires being honest about the market conditions.

IF you don't believe in your marketing, your pricing skills, the property, it shows in your marketing...you must intrepret the market for the client with the info you have available and tell them the truth about what you see. That is what they look to you for, the truth, even if they don't want to hear it.

NAR is saying something like my blog http://activerain.com/blogsview/372745/SELL-NOW-AND-SAVE. Basically the point is that selling in a depressed market when you plan to buy in the same market can save you money in mortgage payment and down payment. See my blog for illustration. So, it's not really UGG, but understanding the market effect on the client and their circumstances.

People need to buy or sell in any market, the key is for you to maximize that for them whatever the challenge.

Life changes, and change often requires a move from one residence to another. It's about knowing the options and making the best choice available at that time rather than believing in the market. As real estate professionals, it is our job to provide our skills, knowledge and service to help clients make the best move dictated by their circumstances. It's more about knowing your market, the needs of your clients and making the best choice available within the market. I'm not a cheerleader for the market, I am a student of the market and how to make it work for clients whether it is moving up, down or sideways.

Thanks - great post. The market I'm in is really not bad at all, although there are certain segments (i.e. new construction in the 'burbs) that have been hit pretty hard. Overall, I'm pretty upbeat and I try not to paint a negative picture unless absolutely necessary -- I just want to be honest and present a realistic picture to my clients.

I agree with Jeanean, this isn't much of a rant. To me, being a good agent means understanding where your market conditions are currently, having a pulse on where the market is going, and providing honest advice to our clients. My market has been healthy this year- prices up year over year, yet I have advised some clients to wait to sell because their particular area is depressed. I am a very optimistic person in general, but I will not lie to my clients or give them false hope about the market. I am honest and my clients love me for that.

Matt,

Most folks who contact me have already made the decision to buy. Do ethics say I should dissuade them from that buying decision because other areas of the country are in doldrums? Or should I help them within my local market, which is not all that weak at this time? I think my marketing is tilted towards those folks who have already made that decision.

Seth Godin says, "Go Hyperlocal." I'm good with that. In the Triangle area of NC there are stronger and weaker locations, and in good conscience, I can help folks find current value in either.

And, my approach to real estate is that home ownership is a mid-term to long-term endeavor. It is difficult to work with folks who consider 10%-30% annual appreciation as a norm. But, in the classic 5 year or longer ownership window, I am very comfortable helping people buy well today.

It is key that agents "fully understand" their market. I've seen a lack of this at times in our local Hilton Head/Bluffton real estate market. Particularly with pricing on homes----it seems that some agents just don't get the pricing issues we all face right now.

Matt,

You pose two distinctively different questions, not one!

"If you don't have confidence in the market how can you sell you buyer clients homes. It sounds like you need to make a decision on a career."

My answer is a simple, NO!As a buyer's agent you have no business selling your fiduciary properties that you don't believe in. This is of course different from selling homes that you wouldn't live in. Selling where you believe the buyer is going to lose money is that same as prostitution! Whoring yourself for the commissions! Reguarding e career decision many have already made it. Remember the old man that ask the young woman if she'd sleep with him for a $1,000,000.00, She said yes. The old man then ask how about $20.00? She indigently says "What do you think I am? He says we've already determined that!

"Is believing in your market going up, a prerequisite to being a good agent?" There are allot of good reasons to buy any given property with out necessary believing it appreciating! I wrote on Bill Roberts blog that some buyers might consider small negative equity as opportunity cost if the loan were assumable. I wrote on your last posting about making a property attractive to an investor. There can be many reason to buy in a stagnet of even falling market.

Applying a strict analyst to a home or small investment property is absurd! When selling homes and small investment properties "solve the people problem!"

Bill

William J Archambault Jr

The Real Estate Investment Institute

©REII

You have to be one with your market. I think you need to know where the good deals are, have the ability to show cash flow and understand where you will have the least vacancies and most potential for future growth. You need to know the good and bad and you have to counsel the client appropriately.

Either you are a good agent or your not, whatever the market conditions.

People use agents for sound advise about current trends and where the market is going, sometimes you have to tell people what they don't want to hear - not telling them is only going to reflect badly, on yourself and on the real estate profession as a whole.

As for buyer's just because a market is declining doesn't mean this is a horriblething... some people who couldn't get into a home before are able. For my buyers, I just try to find them the best deal possible for when they are buying... and let's face it ..in my market, in Central Florida, it's REAL HONEST TO GOODNESS HOMEOWNER'S THAT ARE BUYING NOW!!

Oh. And about NARs campaign "It's a great time to buy or sell a house"

It most definitely is a great time to BUY and it most possibly could be a GREAT time to SELL... in my area values have declined but, they sure have not reached the level that they were a few years ago.. and for many people for instance like my own mother and father... they have lived in the Same house for nearly 20 years.... they have tons of equity...they Could sell and Find a great deal!!! So before you knock NAR's campaign think about what you are saying. NOT EVERYONE is in the same predictimate as the next... EACH buyer or seller is a little different.

Besides, either you are a good agent or your not, whatever the market conditions!

Being positive really has nothing to do with whether your market is challenged or hot. It has to do with your perception of the situation and being able to back up your personal perception with facts. Has the market changed? yes. Will it change again? yes. Will you be mad at me if you do not make the decision to buy and then the feds change the rules regarding the interest deduction?

Aha-went off in another direction, didn't i? And it wasn't about being falsely positive about buying or selling-it's about bringing facts and questions to light with your clients so that they can make their own decisions about buying and selling. It's never been my money, it's my clients' money.

But i can't imagine that anyone would want to buy from a gloom-and-doom person. If you think real estate is dead and will be dead forever, then get out of the game. At that point, you've lost the perspective of being the objective consultant who helps the client.

Excellent topic, Matt. I would like to think that good deals can be found in any market. I think it is easier to find them for clients in a down market, as opposed to a red-hot sellers market. I believe that consumers want honest opinions, not sales hype.

I've been in sales for many years prior to real estate. I always have to believe in the product in order to sell it. I believe in my market regardless if it is going up or down. Markets go in cycles. I believe in home ownership and I think my market is one of the best places in the world to live. I'm honest about market conditions but I don't speculate about prices in the short term. I advise all potential buyers that a home is shelter a place to live and enjoy it's not a portfolio. However, as an investment asset I also believe over the long term there is nothing better.

We need a dose of reality. The great thing about a bad market is it's a good time to buy, becasue you know it's going to go up again. GUARANTEED. Bank on it. So, yes, we must believe that real esatate is a great investment. where folks sometimes get hurt is in the short term. No one ever gets burnt long term.

What Leigh Brown said.

And also to quote John Rockefeller, "The time to make money is when blood is in the streets."

Are we there yet?

WHAT A WONDERFUL BLOG! Honesty, knowledge and believing in oneself makes the ups and downs of the real estate market exciting.

Being a good agent requires that facts are presented to the best of our ability without sugarcoating reality. That has taken some of the enthusiasm out of real estate sales- how could it not- but remaining neutral toward the market conditions has superceded the emotional aspects. Until the next cycle.

I agree! I don't beleive it takes "confidence" in the market, it takes confidence in ourselves as professionals. Who are we to be confident enough to "predict" what the market is going to do? I try very hard to be honest with clients about market conditions and not be too confident that the market will pick-up, because guess who is in the hot seat if it doesn't.....

WASHINGTON - Sales of existing homes fell to the lowest level in nearly a decade in January while the median price for a home dropped for the fifth straight month.

The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by 0.4 percent last month to a seasonally adjusted annual rate of 4.89 million units, the slowest sales pace on records going back to 1999.

The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago.

The drop in sales and the fifth consecutive decline in prices underscored the continued pressure facing housing, which is struggling to emerge from its worst slump in a quarter-century.

I have confidence that I'm not a fortune teller...and I say so. I have no idea where our market will go....when other neighborhoods, states etc. have gone down, going down I can only say what is really going on on Oahu. And even then....residents want to own their own home...military wants to use thier housing allowance on their own home....so whatever is good for the buyer or seller....is how I perform. No short cuts...no fluffing if there is no fluff to be had.

Rant on.

People are relying on us to study the statistics of our local market and present them accordingly. I have my first clients in a year that are paying for a house at appraised value (everything else has been less). They LOVE the house, so they are willing to pay it. I have shared my concerns and they are walking into the house with full knowledge of what may lie ahead. I did my job, presented the information to the best of my knowledge, and let the client decide. That is what we are here to do.

We don't have to condescend to the American consumer with ra, ra junk. People still want to live in a house.

I just read a similar issue from a lender in Colorado! They thought the agent just wanted to write a contract... but the agent had NOT educated the buyer about the builder - or the market...

This is a good point. We can't sell something we don't believe in. Trust me they can tell if you're really into what you are trying to convince them of. It's our attitude that we bring on a daily basis.

It is important to remember that as an agent, you are your client's fiduciary. As a fiduciary, you have the responsibility to share your honest opinion about your local market with your client. Up or down, this is not just good, it is REQUIRED of you (falling under your duties of honesty and loyalty).

That said, presumably free market values have future expectations "priced in" already. Also, in a market in which you lack confidence, it's likely that others share your opinion and consequently, there are good deals to be had. So when your client comes to you looking to buy a house, perhaps "I wouldn't buy right now," is not the right advice. Instead, one should focus on using the state of the market to increase their client's bargaining power. There are a myriad of reasons to purchase real estate. It is just as foolish to assume that your client's reason is to capture one or two years of appreciation as it would be for your client to actually buy for that reason.

Back in the early 80s interest rates were 18-20% and even higher once or twice. We sold house back then and I feel condfident we can do it again if it becomes necessary.

A home in (or should be) primarily a place to live first and an investment second.

Great conversation starter! Markets will always go up and down - I think clients will always appreciate honest evaluations of the marketplace, and that trust will extend through the bad, good and great times.

Matt,

The mark of a good agent is being able to play the hand he/she is dealt...the market is what it is...if you're a professional you know the cyclical nature of markets and deal with it...if you were only in for the glory days, you're probably whining or out of the 'game' already!!! JMHO, Thanks, Fran

I believe an agent has to see the silver lining regardless of all the negatives or I would recommend an immediate career change. This is an market of unusual opportunity: however I would suggest that anyone proceed with caution when participating in any real estate transaction.

The American Dream during the Seller's market was a impossible financial equation for many. At the height of the Seller's Market I was highly concerned with the continued rising cost of homeownership. Now that we are in the Buyer's market I am concerned about two things: the stability of the lending industry and the stabilization of home values.

Since I have no control over these factors. With each client I initially identify their goals. For First-Time Buyers there are some great long-term homeownership opportunities, a great investment with probable returns. For an Investors that are looking for a quick turnover, probably not. I would ask any investor to be realistic.

I daily do my due dilengence staying abreast of the the market, keep my clients informed of changes that may adversely affect them or opportunities that may benefit them.

Not a problem. We're buyers agents and we look for home, not houses or properties, homes.

Once we find a home that our buyers love, we give them our best advice about the market and pricing. But, it's not that much of a problem when you find homes for families.

Matt - we teach this in our seminars, and post about it frequently too. Our position is the market is. It's neither bad nor good. Sometimes its fast, other times slow. No matter what it is, ours is a profession of helping others and building trust. Market conditions never take that away. Opportunities abound, albeit sometimes in different forms, but always opportunity either way.

cheers

BTW - you guys are doing great these days. Kudos again for bringing Rich in.

Great post Matt. I avoid the negativity but I don't sugarcoat anything either and I let people know how I see the current situation and how it will affect them. There are so many factors to consider.

If all realtors were as honest about the market as Broker Bryant, the general public might actually believe what realtors (and the NAR) have to say. It is a matter of credibility. If I pay money to hire an agent, it's to get their expert advice, not to convince me that "it's a great time to buy or sell". Save the sales pitch for the person you're NOT representing.

Matt, I agree with you. A good agent tells clients what they need to know, not what they want to hear.

I don't know if faith is the right word. But you definitely have to try and keep up with it. It can get kind of crazy here.

What ever the conditions of the market, we as professionals in the real estate business must gives our clients the good, the bad, and the ugly. There are those out there that will purchase a home regardless of market conditions, to fulfill their personal need, it's our job to keep them informed and educated through out the process.

We can't change the market. The market is what it is. We just need to be positive about what we do and how we help the people who we are working with.And do the very best we can. Our 2 cents.

Matt, I couldn't agree with you more. I feel it's our duty to give our clients all the information, not just the positive news. Nothing builds trust more than a client seeing that you will give them the real story. Sure, it may change their timing, as you said, but in the long run, you will earn their business many times over!

FEB

2008

Some consumers are buying a roof over their heads. Others are less practical and are buying a lifestyle. As long as we don't mislead them and help them to achieve their respective goals, we're doing no harm and they'll take note of it.

I think it requires doing the best job that you possibly can and being honest at the same time! Of course you HAVE to know your market if you are to do the best job possible!

Goodness....I hope so! I expect the agent to be informed and somewhat of a "cheer leader". Thank you for sharing.

FEB

2008

Matt...Good question easy answer...tell the truth ..show the stats... let the chips fall where they may...But then I am a Broker Bryant devotee...and my job has me anchored in reality, buying foreclosures and distressed properties....

Inventory sitting for months and months should set the sellers on the egde of reality but they tend to think another Realtor with a "special" marketing plan with make it happen...I ask people, what do you do..If they say sell insurance..I tell them to spend the next 90 days at 25% above the market, see how well that works, I don't care how much you advertise it!!

MAR

2008

It's not about believing if it will go up, go down or stay the same...in any market people are still buying homes. I think the real question Matt is whether or not the Agent has a positive outlook on selling your home, regardless of the market. Negativity breeds negativity...positivity is the key to life :)

APR

2008

Real Estate typically is not a short term investment. I am tremendously confident in the market. The consumer needs information & guidance.

MAY

2008

Being a good agent to clients who are wanting to buy a home means being honest with them and helping them make a good decision. To be misleading and say positive things when it's not true would be NOT DOING A GOOD JOB.

MAY

2008

I don't think any of us are fortune tellers - the market has its high and lows and right now it is harder for sellers and easy for buyers. My job is not to be positive, but to provide information to help facilitate decisions. That being said, I am having a very busy year so far - that is positive, but also a fact.... :)

Disagree with Courtney on "my job is not to be postive". In providing information and facilitating decisions it is key to be factual but adding an additional negative gloom and doom or scare tactics is not professional. The media does enough of that that we don't have to heap coals on that fire. Rates are low, supply is attractive real estate synopsis period. Or you could have said "end of the world, better take this offer as last one for many moons" and proceed to point out everything wrong with the property. Attitude is key. We like appraisers reflect the market conditions and what has happened the last six months price wise for comp sales to help make those decisions.

MAY

2008

I tend to the the realistic side of this market condition. The tide turns in cycles and this cycle that we are coming out of, has by far been the strangest and most confusing. The pre-foreclosure and short-sale properties are making the determination of property values almost impossible.

If you don't believe in what you're selling; how can you sell it?

JUL

2008

What exactly is there to "believe in" This is not a religion. Knowing your market, and being able to come up with intelligent thoughts as you did in your previous post will likely get your farther in life than "believing in" or blinding pledging your faith or belief in the local real estate market. I believe the local real estate market exists, not much of a debate there but it is what it is and things are worth what they are worth.

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Matt Heaton

Bothell, WA

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